The Sidi Kerir Petrochemicals Company (SIDPEC) reported a loss during the first quarter (Q1) of 2020.
The bottom-line recorded a loss of EGP 31m in 1Q 2020, compared to a loss of EGP 33m in 4Q 2019.
The company’s revenue amounted to EGP 951m in 1Q 2020, down 8% quarter-on-quarter (q-o-q), and 22% year-on-year (y-o-y), close to the estimated EGP 940m for the quarter.
Cash flow from operations came in as inflows of EGP 126m, compared to EGP 195m in 4Q 2019 and an outflow of EGP160m in 1Q 2019
The company’s weak operating performance was predominantly led by low product prices, notably high density polyethylene’s (HDPE) prices that declined by 8% q-o-q and 22% y-o-y.
Ethylene dropped by 8% q-o-q and 16% y-o-y, trading at its lowest levels in a decade, impacted by global oversupplies amid weak demand. Sales volumes, however, were expected to have improved during the quarter.
SIDPEC’s 2nd consecutive quarterly loss comes also on the back of feedstock (ethane-propane mix) prices having been left unchanged at an elevated level of $7.0/mmbtu by state supplier GASCO.
SIDPEC’s management had previously lobbied for a reduction in feedstock prices, given weak output prices. Going forward for the near term, with petrochemical prices continuing to trade weakly, SIDPEC’s earnings performance is expected to remain in negative territory. This will remain so unless relief is received in the form of a reduction in the feedstock price.
